No more competing divisions: Microsoft announces major reshuffle

The goal is "One Microsoft."

We've heard rumblings of an imminent Microsoft reorganization for some months; today, it came to pass. CEO Steve Ballmer has announced the company's new shape and its new approach to developing products.

The reorganization sees an end to the product-based divisions such as "Windows and Windows Live" and "Microsoft Business Division." What Ballmer wants instead is "One strategy, one Microsoft." To do this, the company is being organized by function. Microsoft will have four engineering teams—operating system, apps, cloud, and devices—and then a number of company-wide groups for Marketing, Business Development and Evangelism, Advanced Strategy and Research, Finance, Legal, HR, and Operations. Here are the main groups:

Terry Myerson, formerly head of the Windows Phone team, will take charge of the Operating Systems Engineering Group. This group will manage all operating system development, from phone to console to PC to cloud. The team will also own certain core cloud services.

Julie Larson-Green, formerly head of Windows engineering, will take charge of the Devices and Studios Engineering Group. This group will manage the development and supply chains of all Microsoft devices, from mice to Xboxes, and will also be the home of all music, video, gaming, and entertainment teams.

Qi Lu, formerly of the Bing team, will run the Application and Services Engineering Group. This will house productivity and communication software (such as Office and Skype) and search.

Satya Nadella, formerly president of the Server and Tools division, will head the Cloud and Enterprise Engineering Group. This group will own data center and database software. It will also continue to be responsible for developer tools.

Eric Rudder, formerly chief technical strategy officer, will lead the Advanced Strategy and Research Group, focusing on new technology trends and trustworthy computing.

Tami Reller, formerly the chief marketing officer and chief financial officer in the Windows division, will lead a new Marketing Group that will also centralize all advertising.

Tony Bates, formerly Skype CEO, will run the Business Development and Evangelism Group, both working on partner relationships (such as those with Nokia, Yahoo, and PC OEMs) and evangelism and developer outreach.

Amy Hood will continue as chief financial officer, and the Finance Group will now centralize all finance operations that were previously managed within each division.

The Dynamics division will continue to stand somewhat apart from the rest of the company due to what Ballmer calls its need for "special focus."

Human Resources (which will continue to be led by Lisa Brummel) and Legal and Corporate Affairs (which retains Brad Smith as General Counsel) will remain in much the same form as they take today. Similarly, Kevin Turner will continue as COO, overseeing worldwide sales, stores, IT, and licensing operations.

Ballmer also announced some other personnel changes. Kurt DelBene, president of the Office division, will be retiring. Craig Mundie, who has been serving as advisor to Ballmer, will now devote all his time to a "special project." Rick Rashid, formerly chief research officer and head of Microsoft Research, will now move into the OS engineering group to drive core OS innovation.

In addition to describing the new groups within the company, Ballmer also outlined Microsoft's new way of working. He emphasized five adjectives: nimble, communicative, collaborative, decisive, and motivated. Microsoft has already started down this path with Windows 8.1. Major products, such as Windows and Office, will have teams that span the different engineering groups, so they will draw technology from all these groups.

For most of the company, this represents a major organizational and cultural shift, and it won't take place overnight. Ballmer said that the reorganization process will take at least until the end of the calendar year.

This is the marshaling of the troops for Steve Ballmer's last war before he retires. This is the war for Big Data and the cloud in which an alliance of old friends and foes (e.g. Apple, Oracle...) will do battle against younger challengers, basically Google.

If I'm right about this, this war will last between 5 to 10 years. It's too early to see how this will evolve but I would dare betting 100 large pizzas that the biggest loser will be IBM and Amazon may come out ahead.

Business jargon. When all the companies do the upper management/HR/business paradigm shuffle every few years, they all hit the same things. Multiple other companies have done the "One <non-descript company>" thing and it is still one big company with multiple divisions. Boeing did it and the "One Boeing" still consists of two major internal divisions that still compete against each other for annual bonuses.

This is the marshaling of the troops for Ballmer's last war before he retires. This is the war for Big Data and the cloud in which an alliance of old friends and foes (e.g. Apple, Oracle...) will do battle against younger challengers, basically Google.

If I'm right about this, this war will last between 5 to 10 years. It's too early to see how this will evolve but I would dare betting 100 large pizzas that the biggest loser will be IBM and Amazon may come out ahead.

So no more Office telling everyone else to dealwithit?Or maybe Office is just in charge of everybody now.

Well they are still in separate divisions. I don't see how this solves anythings: the OS Division can still keep developing interesting touch-screen interfaces, and the Office/Apps Division can still keep ignoring them.

This is the marshaling of the troops for Steve Ballmer's last war before he retires. This is the war for Big Data and the cloud in which an alliance of old friends and foes (e.g. Apple, Oracle...) will do battle against younger challengers, basically Google.

If I'm right about this, this war will last between 5 to 10 years. It's too early to see how this will evolve but I would dare betting 100 large pizzas that the biggest loser will be IBM and Amazon may come out ahead.

In addition to describing the new groups within the company, Ballmer also outlined Microsoft's new way of working. He emphasized five adjectives: nimble, communicative, collaborative, decisive, and motivated.

Why is it that my mind wanders whenever somebody in management tries to boil a strategy down to a handful of adjectives?

In addition to describing the new groups within the company, Ballmer also outlined Microsoft's new way of working. He emphasized five adjectives: nimble, communicative, collaborative, decisive, and motivated.

Why is it that my mind wanders whenever somebody in management tries to boil a strategy down to a handful of adjectives?

Business jargon. When all the companies do the upper management/HR/business paradigm shuffle every few years, they all hit the same things. Multiple other companies have done the "One <non-descript company>" thing and it is still one big company with multiple divisions. Boeing did it and the "One Boeing" still consists of two major internal divisions that still compete against each other for annual bonuses.

Actually there is in fact a point to this. Horace Dediu of the podcast Critical path had two interesting podcasts about Apple and their structure. The summary is that Apple and small companies organize around functions, whereas Microsoft was organized around products. A functional organization doesn't create these silos where there are repetitive functions in each silo, and where a silo can sabotage another silo because it's not in one of their interests, even if it's good for the company. An analogy would be that you have a company which sells a lot of things, but each salesrep is in charge of a single product line. That might seem efficient, but it opens up salesreps to fight each other for territory, overlaps in products, and salesreps who see their lines diminish fight to keep them rather than let them retire. If all salesreps sold all products, they would be motivated to make the whole company successful, and there would be less infighting amongst products especially if there needed to be major product line changes.

You may not like Apple, but you can't argue with the success they've had. Also I'm saying this will be an instant success; Balmer could still screw up. But it's not your typical reorg, and I think Horace is talking about it because it's something that other large technology companies are considering to improve success.

They really needed this. Even as a tech savvy person, I get confused trying to navigate MS's websites and divisions. Their message is all over the place, with the Surface division somehow fixated on the dumb snap of the clip on keyboard while the Windows division is focused on "experiences" and "lifestyle." Hopefully we see a more consistent message with this reshuffling, they drastically need it.

In addition to describing the new groups within the company, Ballmer also outlined Microsoft's new way of working. He emphasized five adjectives: nimble, communicative, collaborative, decisive, and motivated.

Why is it that my mind wanders whenever somebody in management tries to boil a strategy down to a handful of adjectives?

At least they didnt try and form some kind of acronym. The only thing worse than a handful of adjectives is a handful of contrived adjectives.

Ok, as I see it there are two things coming out of this that that will spell whether this will stick or just be one of several "reorgs" as MS tries to get its house in order.

The first is that they have centralized Finance. So there's only one bottom line. This could/should mean less infighting over product direction/goals/oversight as each department will be responsible for the overall bottom line, not just their own.

The second is that the "Engineering Group" is still just four separate silos, organizationally. Why should apps and OS be separated, for instance? It smacks of deck chair re-arranging.

Still, I think overall its a necessary first step toward realigning the company toward the new realities of the consumerization of IT markets. The question in my mind is, does it go far enough? Or is it a day late and dollar short?

A dozen division managers, who previously ran their own fiefdoms, are on the Bellevue Club golf range as I'm typing this, planning how to cockblock this so they can go back to business as usual.

I think that will be the more interesting story in the next few months. How much of the jilted upper management is going to attempt to work over their peers while trying to look good for the boss and retain all the previous power they had.

I also wonder if the OS group is still not going to play nice with the Dev group.